For the past month, the Unlisted Public Company Market (UPCoM) has welcomed newcomers from the banking sector. On January 9, Vietnam International Bank made its debut on the stock exchange with 564 million shares. A few days earlier, Kienlong Bank and Techcombank had been granted permission to list on the UPCoM with 300 million and 880 million shares, respectively.

Since December 2016, Vietnam Prosperity Bank has also sought shareholders’ approval to join the fast-growing stock bourse. The Oriental Commercial Bank, however, intended to skip the UPCoM and list directly on the Ho Chi Minh City Stock Exchange this year, a move that was approved by its shareholders last month.

“The market has welcomed many banks recently, and investors are hoping that these debuts will have a positive, ripple effect for the entire financial sector, similar to what Sabeco and Habeco did for beverage stocks recently,” analysts from Saigon Securities Incorporation wrote in a daily note to investors.

The rush to join the stock market is significant for the banking sector, as no commercial banks have listed their shares on the stock exchange since 2014. To date, only 10 of Vietnam’s 30 banking institutions have been listed on the Hanoi and Ho Chi Minh City exchanges. The remaining 20 banks are still lurking on unregulated, over-the-counter markets.

At general stakeholder meetings throughout the year, investors have repeatedly enquired about banks’ plans to join the stock exchanges. The common response was that financial institutions would like to list, but their plans at the time were upset by unfavourable market conditions and underpriced bank stocks.

Bank investors were not the only stakeholders to press on this matter. The State Bank of Vietnam (SBV) and the Ministry of Finance (MoF) have consistently reminded financial institutions to list, as evidenced in SBV’s Document 657/NHNN-TTGSNH in 2015, and MoF’s Circular 180/2015/TT-BTC in early 2016. According to Circular 180, all commercial joint-stock banks must make their debut on the UPCoM between 2016 and 2017 to ensure transparency and liquidity.

Transparency is a prominent issue for banks, as SBV has earmarked 10 commercial banks to adopt the Basel II banking standards in 2018. Criteria for transparency and capital adequacy under Basel II standards are much stricter than the existing Basel I guidelines, forcing commercial banks to join stock bourses immediately.

Economics expert Nguyen Tri Hieu said listing will boost transparency for banks, as their business results, financial reports, and trading activities will be monitored by the market. Liquidity will also pick up since investors can buy and sell openly on the market, raising the prospects of bank stocks in general. This is one crucial step towards improving the Vietnamese banking sector and attracting foreign capital.